7 Surprising Ways to Boost Ecommerce Profits with 3PL Fulfillment

Sometimes it makes more sense to outsource part of our business operations than to do it in-house. When it comes to logistics, warehousing, and fulfillment, the majority of successful Canadian ecommerce companies turn to experts in those fields.

The right third-party logistics (3PL) fulfillment company can streamline your operations, reduce your operating costs and help you serve your customers. Typically, the 3PL company will manage inbound shipments, distribution, warehousing, and shipping your orders. Those services alone will save you an extraordinary amount of time and money when it comes to labour, expertise, inventory management, and warehouse space.

Third-part logistics for ecommerce illustration - how it works

But wait, there’s more!

As the needs and requirements of ecommerce businesses have expanded, so have the services provided by some of the top 3PL companies. The best ones offer extended services that include product labeling, bundling, kitting, online store management, returns and customer support, freight forwarding, FBA prep & ship, and much more. They’re designed to work seamlessly accross channels and they integrate with all major ecommerce platforms. These services can be used strategically to easily grow your bottom line.

If you’re new to 3PL, please read Canadian Third Party Logistics (3PL) for Online Sales and Ecommerce for a thorough introduction.

7 Ways Fulfillment Companies Drive Ecommerce Revenue

Following are a few ways successful ecommerce companies are using third-party logistics and fulfillment services to increase profits.

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1. Kitting

When your customer receives their order, they’re going to open the box when it arrives. They are guaranteed to see what’s in that box, which is your opportunity to bring them back (or make a first sale from a gift recipient).

Your 3PL company may provide services that will help you do that, such as:

  • Kitting or bundling in your branded box
  • Coupons
  • Freebies

ShipBob offers the option to customize packaging and tell a story through our products when shipping to our customers, giving us more control over our business and brand,” says Matt Dryfhout, Founder & CEO of BAKblade.

2. Bundles

Bundles are a proven way to increase order values and their convenience will often make the sale. Bundling can be done by 3PL companies that offer the service, even if they’re made to order. Once you’ve set it up, everything is automated.

3. Subscriptions

Subscriptions are very popular in Canada and many products are good candidates. A full-service 3PL can automatically ship your subscriptions, usually monthly or quarterly.

4. Eco-Friendly

Sustainable practices sell. Sustainability is a top concern for many consumers, and a lot of them will pay more to ensure their purchase is environmentally friendly. They also watch for wasteful practices, especially when it comes to shipping. They want eco-friendly and biodegradable packaging, sustainable shipping practices, carbon emission offset, and company practices such as sustainable products and avoiding product returns. Your fulfillment partner will almost certainly have at least some of these eco-friendly practices in place to help the planet, while also impressing your customers.

5. Free & Fast Shipping

Offer free, fast shipping through many popular ecommerce platforms with integrated 3PL services. Shipping is less expensive through third-party fulfillment, as a rule, especially if they have multiple distribution hubs for you to stock with inventory. When you’re products are closer to the customer, they’re cheaper to ship.

Add a free shipping eligibility requirement of a minimum order value to increase basket size, typically calculated at a minimum of 15% higher than your average order value (AOV).

Average Order Value $50 + 15% ($7.50) = Minimum Order to Qualify for Free Shipping $57.50

If you’re shipping in or from Canada, however, I recommend a minimum order of up to 50% above your average order value. You might also want to exempt heavy or large items.

“TB12 uses a progress bar as part of their shopping cart, which calculates the amount of money you need to spend to qualify for free shipping (pre-checkout),” says a ShipBob report. “Since launching the progress bar, their AOV has increased by 15%, and their margins can withstand it since they’re shipping through ShipBob’s network inexpensively.”

Splitting your inventory to several distribution hubs will not only reduce the cost of shipping and the time it takes to arrive, but it will also serve as a backup plan. You can choose to ship from a different distribution hub if weather or another local issue prevents shipping from the closest warehouse. Additionally, if one warehouse runs out of one of your products, you can have it shipped from another location.

6. Easy Sales Channel Expansion

While you can sell direct to consumers (DTC) from your own website, most ecommerce companies sell through multiple sales channels to ensure they accommodate all customer preferences. In fact, a ShipBob survey found over 43% of online sellers have a primary sales channel outside of their own ecommerce website.

As of this year:

  • Over 70% of online businesses will sell through a new sales channel.
  • Over 73% already sell through two or more sales channels.
  • Just under 48% sell through three or more sales channels
  • Just under 15% sell on five or more sales channels.
  • Just under 49% sell in-store through offline retail or wholesale.

You may also offer special wholesale arrangements through a 3PL company, such as dropshipping.

Any & every channel you choose will have to be synced with your inventory tracking so you don’t oversell the item, which can be managed by the third-party logistics company.

“What’s listed on multiple channels must match what you actually have for available inventory in your warehouse,” advises the ShipBob report. “To maintain stock levels, replenishments, and forecasting across sales channels and SKUs, you must factor in various buying behaviors, turnover rates, return frequencies, shipping speeds and lead times, and overall demand.”

Integration and compliance can also be handled by your 3PL provider, such as individual retailer’s unique compliance guidelines and business-to-business (B2B) fulfillment and shipping automation.

7. International Expansion

If you serve international customers, or plan to in the future, a 3PL company with distribution centres around the world is a must. Otherwise, you may have to deal with multiple distribution partners and that can end up costing you money and time. Using a single 3PL provider brings with it reduced shipping costs & times, less Customs & duties, and overall easier administration.

Invest in Growth

Logistics and order fulfillment is only an expense on paper. With a full-service, third-party logistics provider it’s actually a high-return investment in your company’s growth, as well as a contingency plan.

Do you use third-party logistics (3PL) fulfillment? Please share your experience or questions in the comments below, or join us in the Online Business Canada Facebook group.

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Melody McKinnon
Digital Business & Marketing Manager at Online Business Canada | Website

Melody McKinnon is an internet entrepreneur with 25 years of experience in a wide range of online business models, backed by a formal business education and enhanced by training and mentorship. She has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available from all major ebook retailers.

Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadianDigitalMedia.com, CanadiansInternet.com, CanadianFamily.net, and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.

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Optik

We were thinking about hiring someone to help with orders here but 3pl seems like easier solution for future growth and it’s actually cheaper and easier than hiring people so there’s that……………..

Pax

I narrowed it down to two fulfillment companies but I’m frozen on committing to one. It’s such a big decision! I had to give myself a deadline to get me to move on it…by this time next week I’ll be in business. So much useful content here by the way.

Oryan Srvc

It’s almost too easy to expand global for online sales now. My biggest concern is losing a warehouse in a country that doesn’t have any alternatives in the same country from the same business. No backup plan in other words. Big business for small players but with 3pl it’s easier than ever.

Jonny L

Can anyone recommend a 3PL in east, mid and west Canada? The shipping is killing me and I need help managing orders but only in Canada for now.

Norbert Cummerata

Bonjour, j’aimerais dire que cet article est très bien écrit et qu’il contient à peu près toutes les informations essentielles.

Translation: Hello, I would like to say that this article is very well written and contains almost all the essential information.